Fairchild v. North-Eastern Mutual Life Ass'n

51 Vt. 613

Opinion

The opinion of the court was delivered by

Royce, J.

This is an action of covenant broken on a policy of life insurance issued by the defendant to the plaintiff’s intestate, Mrs. Lorane D. Nay. The policy is a contract under seal inter partes — Mrs. Nay of the one part, and theNorth-Eastern Mutual Life' Association of the other part —and to that contract the plaintiff’s intestate and the defendant were the sole legal parties. Had the policy been a simple contract, under the circumstances of this case, the amount of the insurance being made in terms pay able to Faii’child or his legal representatives, an entirely different question would arise as to who is the proper party to bring the suit — Mrs. Nay’s administrator or Fairchild — and it would become our duty to extract some conclusion from numerous and somewhat conflicting authorities. But the policy is a sealed instrument, and its covenants are by and between the legal parties to it, viz., Mrs. Nay and the North-Eastern Mutual Life Association. In deciding who is the proper party to bring covenant broken upon that policy, it is not material that the covenant is for the benefit of a third person. The law is well settled that upon instruments under seal suit must be brought by the covenantee; and although the instrument may be expressed to be for the benefit of a third person, there is not sufficient privity in law between such third person and the covenantor to enable him to maintain an action. 1 Chit. Pl. 3d Am. Ed. 3; Chit. Cont. 5th Am. Ed. 57; Dicey Parties, 101; 12 Pick. 554; 12 Met. 167; Millard v. Baldwin, 3 Gray 484; Inhabitants of Northampton v. Elwell, 4 Ib. 81; 13 Mass. 396; 15 Me. 285; Hornbeck v. Westbrook, 9 Johns. 73; Crampton v. Ballard, 10 Vt. 251; Phelps v. Conant, 30 Vt. 277; Johnson v. Colburn, 36 Vt. 705. This principle is directly applied in the case of an action on a life policy under seal brought by a third person for whose benefit the insurance was obtained, and who paid all the premiums, except a part of the first one, in Flynn v. North American Life Ins. Co., 115 Mass. 449. In that case the court say : “By the policy the insurers promise and agree to pay the sum insured, to Flynn and his representatives. But this promise and agreement is expressed to be made to and with Royle, and his representatives ; and the policy is under seal. Royle, and not Flynn,.is the covenantee. It is well settled that upon an agreement under seal none but a party to it can maintain an action at law. . . . Whatever, therefore, might have been Flynn’s right of action, if the agreement sued on had been a simple contract, there was no sufficient privity between him and the insurers to maintain an action in his name upon this policy.” In the case of Davenport v. The North-Eastern Mutual Life Association, 47 Vt. 528, relied upon by the defendant, the action was assumpsit, and the hearing in this court upon demurrer to the declaration. The question of the legal distinction between a simple contract' and a contract under seal, as affecting the proper party to bring the suit, did not arise. Sections 23, 24, c. 71, Gen. Sts., to which we are referred by defendant’s counsel, do not in any respect modify or change the rules of the common law in respect to the proper parties to an action brought to enforce a contract of insurance. The action, therefore, is properly brought by the administrator of Mrs. Nay.

The second point made by the defendant is that Fairchild had no insurable interest in the life of Mrs. Nay, and that the policy is therefore a wagering contract, and void by the law of this State. This action is brought by Benjamin Fairchild in his capacity of administrator of the estate of Mrs. Nay, as the nominal party to the sealed instrument declared upon. Section 18, c. 52, Gen. Sts., provides that, “when an executor or administrator shall commence or prosecute an action for any debt, demand, or claim for damages, and shall be only a trustee of such claim for the use of another person, or where the claim, although prosecuted in the name of the executor or administrator, belongs to another person, the sum or property recovered shall not be considered as assets in the hands of such executor or administrator, but shall be paid over to the person entitled to the same, after deducting or being paid the costs and expenses of the prosecution.” Upon this statute and the evidence before us it must be assumed that the plaintiff sues also as trustee for the beneficiary, named in the policy and the real party in interest in this suit, viz., himself. If it were shown, therefore, that in point of fact Fairchild procured this policy to be issued upon the life of Mrs. Nay himself, and for his own benefit, the question of his insurable interest perhaps might properly arise. But the prima-facie showing of the policy, application, and receipts is, that Mrs. Nay procured the policy to be issued herself, upon her own life, and chose to make Fairchild the beneficiary. To rebut this, the only evidence in the case tending to show that Fairchild procured the policy to be issued, is his own testimony that he paid the assessments made upon the policy by the company and evidenced by the receipts which are made a part of the case. Whether he paid them from his own pocket, or'at the request and as the agent of Mrs. Nay, does not appear; and in such a state of the evidence, the presumption being in favor of the verdict, we are bound to presume that the policy was procured by Mrs. Nay upon her own life, as is the purport of the instrument itself, the application upon which it was issued, and the receipts for payments, and that whatever payments Fairchild may have made were made at her request. “ It cannot be questioned,” say the Suprome Court of Indiana, in Provident Life Ins. Co. v. Baum, 29 Ind. 288, “ that a person has an insurable interest in his own life, and that he may effect such insurance, and- appoint any one to receive the money in case of his death during the existence of such policy.” And he may effectuate this object by an assignment of the policy, or by immediately appointing such person as the beneficiary. Nor can the insurer set upas a defense to an action brought upon such a policy by, or for the benefit of, the beneficiary or assignee a want of insurable interest in the plaintiff, especially where common-law rules of procedure obtain and the beneficiary or assignee must sue as plaintiff in the name of the assured. Clark v. Allen, 17 Am. Law Reg. n. s. 83; Conn. Mut. Life Ins. Co. v. Schaefer, 16 Ib. 392; 13 N. Y. 31; 20 Ib. 32; 29 Ind. 236; 2 Casey 189. In Campbell v. New England Mut. Life Ins. Co. 98 Mass. 381, the court say : “ It is the interest of A in his own life that supports the policy. The plaintiff did not, by virtue of the clause declaring the policy to be for her benefit, become the assured. She is merely the person designated by the agreement of the parties to receive the proceeds of the policy upon the death of the assured. It was not, therefore, necessary that she should show that she had an interest in the life of A by which the policy could be supported as a policy to herself as the assured.” Franklin Ins. Co. v. Hazzard, 41 Ind. 116, and'one. or two Kansas cases are to a certain extent in conflict with these decisions, but they are all cases where the policy was sold by the assured to a speculator, and even under such circumstances the weight of authority seems to be decidedly the other way, the only well supported exception to the general rule being where combination is shown between the beneficiary or assignee and the assured to procure the policy to be issued under cover for the benefit of the former ; and the burden of proof rests upon the insurer to show such fraudulent combination. Valton v. Nat. Fund Life Ins. Co. 20 N. Y. 32. The question of Fairchild’s insurable interest, therefore, does not, upon the evidence before us, properly arise in this action.

The defendant requested the court to charge the jury that the burden of proof was upon the plaintiff to establish the bonafides of the transaction. Upon the case as presented to us, the legal presumption must be that in the matter of procuring the policy to be issued, Fairchild acted solely as agent for the defendant; that Mrs. Nay went to him as such agent, and desired to procure a policy, and he forwarded to his principal her application in writing, with his own certificate as medical examiner, whereupon the policy was made out and issued by the defendant. The contract was by and between Mrs. Nay and the defendant, and Fairchild was not a party to it. That it enured to his benefit, was apparent upon the face of the application, which, therefore, was notice of that fact to the defendant, and sufficient to put it upon inquiry as to whether those representations which were made by Fairchild were true. By neglecting to make that inquiry, and electing to issue the policy, the defendant must be regarded as accepting and ratifying the acts and statements of its agent. The authorities to which we are cited by the defendant’s counsel, support the well-established rule which would cast upon an agent seeking to enforce against his principal a contract made by him as such agent on behalf of his principal, and enuring to his own benefit, the burden of proof to establish uberrima fides. In the case at bar, the contract was not made or executed by the agent on behalf of his principal. The agent forwarded to his principal certain proofs and documents, which upon their face gave notice that the contract proposed was to enure to his benefit; and the principal, upon the representations contained in such documents and proofs, and with such notice, elected to execute the contract and receive the consideration stipulated for therein. It can only be contended by the defendant that if, in the application or medical examiner’s certificate upon which this policy was issued, there was any false representation within the knowledge of the agent, or any omission by him to impart to his principal fully and fairly all knowledge in his possession that might affect the question of Mrs. Nay’s condition of health, then the principal, upon discovery thereof, may repudiate the contract; and-that upon this point the burden is upon the plaintiff. We think, from the case as presented to us, that the defendant can claim no error upon this point, because, in the application and certificate, Mrs. Nay’s condition of health in all respects made the subject of controversy in this action, is set forth in the form of positive statement, and the court charged the jury that these representations were to be regarded as warranties, and that if they were in any respect untrue the plaintiff could not recover, even although their falsity was not known to Mrs. Nay, nor to any one else ; thus, as it seems tó us, more than complying in substance with the defendant’s request.

The question as to the admissibility of that portion of the evidence of Mrs. Edgar Holmes which was objected to, must be considered in connection with the evidence of Mrs. Manley Holmes. The time when the sore on Mrs. Nay’s lip was first noticed was material, and Mrs. Manley Holmes testified with considerable positiveness that it was in June, 1874, while plaintiff claimed it was on or about the 16th of July, 1874. The object and purpose of the cross-examination of Mrs. Manley Holmes seems to have been to show that she was mistaken as to the date, and to obtain from her admissions of facts and circumstances by which it could be demonstrated that she was mistaken. It is often difficult to determine from the record that is sent to this court, whether interrogatories put to witnesses are relevant to any question of fact in the case, or not. The County Court can much better judge of the matter than we can, and where that court has determined the question this court will not reverse its decision, unless it clearly appears to have been erroneous. We understand the rule to be that where the answers to questions put to a witness upon cross- examination may in any degree affect any question of fact that is made in the cause, the questions are relevant. The questions put to Mrs. Manley Holmes upon her cross-examination, we think, were relevant to a material issue of fact in the cause,.and, being relevant, the plaintiff was not concluded by her answers. When a party, in the cross-examination of a witness asks irrelevant questions, or examines him as to collateral matters, he is bound by the answers that the witness may give, but where the examination is relevant, the party is 'not thus bound. Upon the evidence detailed in the exceptions, it would appear that the evidence of Mrs. Edgar Holmes which was objected to, tended to show that the time when the sore was first noticed on the lip of the plaintiff’s intestate was at a later date than the date testified to by Mrs. Manley Holmes, and was admissible.

The only remaining exception insisted upon by the defendant is to the refusal of the court to charge that the proof introduced by the plaintiff had no tendency to show the number of members of the association at the time of Mrs. Nay’s death, the covenant being to pay as many dollars (not exceeding $1,000) as there should be members at that time, and it being incumbent upon the plaintiff to show such number as the measure of his recovery ; and also that there was no evidence that any assessment was made, or attempted to be made, upon the members of the association, to pay the loss upon Mrs. Nay’s policy. The policy itself provides that upon satisfactory proof of the death of the assured, she having conformed to all the conditions thereof, an assessment shall be made in the way and manner therein provided. The presumption being that the defendant has fulfilled all the terms of the contract incumbent on it to fulfil, it was not necessary for the plaintiff to prove affirmatively that the' assessment was made. The notices of assessments made by the defendant upon Mrs. Nay’s policy, signed by the secretary of the association, and put in evidence by the plaintiff, are expressed to be for the payment of death losses occurring at different dates within the time of Mrs. Nay’s membership, from July 17, 1874, to February 18, 1875, her death being admitted in the latter part of March, 1875. In those notices issued under date of October 1, and November 2, 1874, appears the statement, “ We have over 1,000 members at this date, and are daily adding thereto and in the notice, dated January 2, 1875, “We have now 1100 members at this date, and are daily adding thereto.” These several notices further set forth as the number of members liable July 17, 1874, seven hundred and forty-four; August 19, seven hundred and ninety-five; -September 4, eight hundred and thirty-eight; September 18, eight hundred and sixty-five; October 9, nine hundred and thirty-four; February 16, 1875, eleven hundred and eighty-two, and February 18, 1875, eleven hundred and eighty-three, thus showing a steady increase in the membership of the association up to February 18, 1875, when it is represented by the secretary as comprising eleven hundred and eighty-three members. This membership being shown at a date so shortly prior to the death of Mrs. Nay, and the evidence showing an uninterrupted increase prior and up to that time, the presumption, in the absence of proof to that effect, certainly cannot be that there was a decrease between February 18, 1875, and the date of Mrs. Nay’s death; and we think this evidence, taken together, did have a tendency, at least, to prove that at the last mentioned date there were as many as a thousand members, and was properly submitted to the jury for that purpose.

Judgment affirmed.